What happened Monday

Economy / news

A review of things you need to know before you sign off on Monday; Heartland trims TD rates, building consents not recovering, but filled jobs rise, swaps stable but long bond rates jump, oil up sharply, NZD holds, & more

13th Jan 25, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).

MORTGAGE/LOAN RATE CHANGES
No changes to report today. All rates are here. In case you missed it, here is an assessment of the pressures on mortgage interest rates.

TERM DEPOSIT/SAVINGS RATE CHANGES
Heartland Bank has started the new year with lower term deposit rates. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

A TWO YEAR LOW
There were 3,100 new dwellings consented in November, up +4.8% from the same month a year ago, according to figures released by Stats NZ today. Of these, there were 1,402 stand-alone houses, down -4.1% compared with November 2023, and +1,698 multi-unit homes consented, up +14% over the same period. But stepping back from the monthly data noise, it is clear that the sector is operating at the much lower level now.

MORE FILLED JOBS
The latest Statistics NZ figures show filled jobs rose by nearly +6,000 in November - the first monthly rise since March 2024

VALUE UP, AREA DOWN
Non-residential building consent levels in November recorded a second consecutive strong month, driven by public sector activity, with the $883 mln total value of consents, up +15.8% from November 2023. But the building area consented was actually down -10.5%. For the year to November the non-residential consented area was down more than -18%, and that was on top of the -13% fall in the year to November 2023. Expensive schools, hospitals and public transport projects keep the values up, but are relatively small for the cost. Private developers and owner-occupiers are still cautious about significant capital expenditure, with particular softness in the retail space. But at the margins there is still a reasonable amount of work in the industrial/storage segment.

NO JOY FOR RETAILERS
The end of year holiday retail rush didn't make up for the slow start to the month for retailers. Worldline/Paymark data shows a -0.7% dip in December card use at retail outlets, with the retreat led by major centres Auckland and Wellington, both down -2.0%. Not helping was that average transaction values fell as well compared to the same month a year earlier.

GAMING THE RATES OUTLOOK
Floating mortgage rates saw a huge surge in popularity in November, with over $3.5 bln of lending done at floating rates according to new RBNZ figures.

LOAN YIELDS MOVE FOR FLOATING, NOT FOR FIXED
RBNZ data shows that yields on floating rate mortgages fell quite a bit in November, down to 6.52% from 6.81% in October, down -29 bps, down -47 bps from August. Not unexpected of course given the OCR rate cut, although that was -50 bps. Fixed rates actually rose +4 bps on average to 6.33% from August. The yield on all business loans fell -66 bps, to 7.12% from August.

AUSSIE INFLATION PICKS UP
In Australia, the Melbourne Institute's Monthly Inflation Gauge rose by +0.6% in December 2024, sharply accelerating from a +0.2% increase in November and marking the highest level since December 2023. It was also the fourth consecutive month of gain.

JOB ADS RESILIENT
The ANZ-Indeed Australian Job Ads survey rose by +0.3% in December from November, swinging from a revised -1.8% drop in the prior month. The latest level suggests their labour market is still resilient on a short-term basis despite elevated interest rates. On an annual basis however, job ads dropped -12.5% from December 2023. They have dropped almost -28% from their peak in 2022.

SWAP RATES HOLD
Wholesale swap rates are probably little-changed today. Our chart below will record the final positions. The 90 day bank bill rate was unchanged on Friday at 4.12%. The Australian 10 year bond yield is up +17 bps from this morning to 4.70%. The China 10 year bond rate has risen +2 bps to just on 1.64%. The NZ Government 10 year bond rate is up +12 bps at 4.77% while today's RBNZ fix was 4.70% and up +3 bps. The UST 10yr yield is now just on 4.77% and up another +1 bp from this morning. Their 2yr is now just on 4.38%, so that positive curve has raced out to +39 bps. Here is a review of recent sovereign bond rate moves, although today's large local jumps have happened after that article was published.

EQUITIES IN RETREAT
The NZX50 has fallen -0.8% in late still-thin trade today. But the ASX200 is down another heavy -1.4% in afternoon trade. Tokyo has opened its Monday trade down -1.0%. Hong Kong is down -1.5% and Shanghai is down -0.3%. Singapore is down -0.4% at its open. The futures market is signaling that Wall Street will open tomorrow up +0.3% on the S&P500. But that may depend on how the bond market opens there.

OIL JUMPS
The oil price is up +US$1.50 from this morning, now just on US$78/bbl in the US, and now just on US$81/bbl for the international Brent price. That makes this price set its highest since August.

CARBON PRICE SLIPS SLIGHTLY
The carbon price has slipped today by -$1.20 to NZ$62/NZU. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD MARGINALLY SOFTER
In early Asian trade, gold is down -US$2 from this morning, now at US$2688/oz.

NZD LITTLE-CHANGED
The Kiwi dollar is up +10 bps from this morning, now at 55.7 USc, consolidating at the lower level. Against the Aussie we are unchanged at 90.4 AUc. And against the euro we are up +10 bps at 54.4 euro cents. This all means the TWI-5 is now just on 66.7 and little-changed from where we opened today.

BITCOIN DIPS FURTHER
The bitcoin price has slipped to US$94,221 and down -0.7% from where we opened this morning. Volatility of the past 24 hours has been modes at just under +/- 1.2%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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52 Comments

by J.C. | 13th Jan 25, 4:14pm 1736738089

Over the ditch, the deeply compromised National Anti-Corruption Commission has completed its first investigations invoicing taxpayers for $140 million. And surprise, surprise - no corruption has been found.

NACC won't say if Angus Taylor's "Watergate" was investigated - despite 2 of 3 cases related to "procurement". For those unaware, this $80 million scandal in 2017 is about the former Coalition Government procuring at vastly inflated water rights from a Cayman Islands company founded by Taylor, who was Energy Minister at the time of the deal.

You couldn't make this stuff up.

https://theklaxon.com.au/nacc-finds-no-corruption-spends-140m-to-date/

by interesting1234 | 14th Jan 25, 8:08am 1736795298

Friendlyjordies (youtube channel) does a better job at exposing corruption than they do. Mental.

by J.C. | 13th Jan 25, 4:37pm 1736739431

The LA fires warrant a 'Marshall Plan' under Gavin Newsom who has announced a sweeping plan to rebuild Los Angeles, dubbing it "L.A. 2.0". Newsom claims he’s already mobilizing city officials, civic influencers, business moguls, and labor unions to execute his vision.

He says that the region will be completely transformed with federal assistance to reshape LA before the Olympics.

Marshall Plan should give a sense of the scale of the disaster. But as someone pointed out to me, this sounds very much like a fantasy from the World Economic Forum. Remember the 15-min City vision that was even being touted for Aotearoa?

https://www.nbcnews.com/meet-the-press/video/gov-newsom-says-he-s-organ…

by Squishy | 13th Jan 25, 4:57pm 1736740672

...civic influencers...

A what?

The major problem they're going to run into is that this is a very bad time to borrow. There will be substantial fiscal constraints on any public rebuilding effort.

by J.C. | 13th Jan 25, 5:09pm 1736741389

The US had budget surpluses during the years leading up to and including the early phases of the Marshall Plan. Specifically, the U.S. had budget surpluses each year from 1946 to 1949. For ex, in fiscal year 1947, the federal government recorded a surplus of approximately $4 billion, which was about 1.7% of GDP at that time. This surplus provided a financial cushion that enabled the U.S. to allocate substantial funds toward international aid programs like the Marshall Plan without immediately increasing national debt.

Considering the US is not running surpluses and national debt being out of control, does the Newsom's LA 2.0 make much sense as a Marshall Plan?

by Squishy | 13th Jan 25, 5:16pm 1736741789

The Marshall plan was financing Europe to buy American overproduction post-war. The US isn't overproducting currently and California isn't a foreign country (much as many Californians wish it was at times.)

by J.C. | 13th Jan 25, 5:20pm 1736742041

California's nominal GDP is approx USD4.1 trillion, making it the 5th largest economy in the world, following the United States, China, Germany, and Japan.

by Pa1nter | 13th Jan 25, 7:49pm 1736750977

Specifically, the U.S. had budget surpluses each year from 1946 to 1949.

Gee, I wonder why?

by M0ralHazard | 13th Jan 25, 5:01pm 1736740863

What was wrong with the 15min city idea?

by J.C. | 13th Jan 25, 5:11pm 1736741494

What was wrong with the 15min city idea?

Did it happen? Where? Arguably, urban Japan is a great example of what 15-min cities may look like.

But reality doesn't come from a genie lamp.

by Baywatch | 13th Jan 25, 6:01pm 1736744471

We will always have Paris JC

https://www.wri.org/insights/paris-15-minute-city

by J.C. | 13th Jan 25, 6:15pm 1736745335

No. Paris is not a "15-min city." It has implemented cycling infrastructure. It benefits people living in the more expensive arrondissements of Paris. The lower down the socio-economic chain, the less it applies. Even in Japan, few people can commute to their workplace in 15 mins. It's the stuff of fantasy.

by Baywatch | 13th Jan 25, 6:19pm 1736745583

It's the stuff of fantasy....maybe in your head?

Until just a few years ago, the right riverbank of the Seine in Paris was an urban highway used by over 40,000 vehicles every day. Despite being named a UNESCO World Heritage Site, the road was either heavily gridlocked during rush hour or was a corridor for cars traveling at high speeds. It contributed to the city’s high rates of air pollution, which regularly exceeded EU limits and contributed to thousands of deaths each year in the city.

In 2016, the road was converted into a car-free linear park, used by commuters during the week as well as residents and visitors for leisure activities on the weekends. The move was part of a larger attempt to improve air pollution and livability in the French capital — later referred to as a “15-Minute City” program — which spanned a wide range of public investments across transportation, sustainability and new programs to strengthen neighborhood-level governance.

by J.C. | 13th Jan 25, 6:43pm 1736747021

You have any idea of how expensive it is to live along the Seine? I guess not. But that was always the issue with this nonsense - reality. Amsterdam is a far better example in Europe. Valencia even.

Like I said, urban Japan is quite possibly the closest to what a 15-min city urban design catering to all socio-economic groups. It's not perfect but far better than Paris in terms of amenities and what the idea of 15-min cities promised.

In Aotearoa, it's considered "woke fantasy" by many for the obvious reasons.

by Baywatch | 13th Jan 25, 7:04pm 1736748297

If you say so JC..hopefully Cindy is now out of your head and taken up by the Woksters.

An example of it working that I visited just this year...

Barcelona is viewed by many as the ideal template for a 15-minute city. Work is already underway to improve its walkways and cycle lanes, and digital twins – digital replicas of systems and environments – are being used by to help simulate how planning and structure changes will impact the city.

by J.C. | 13th Jan 25, 7:32pm 1736749921

Barcelona is viewed by many as the ideal template for a 15-minute city.

Sure. But Catalonians are also very pragmatic people and not driven by romanticism. Their immediate concerns have been more focused on how they can provide affordable housing for their citizens and not be sacrificed for the tourist hordes.

As for Ardern, she's probably counting her lucky stars that she was the first to be cut down from the Anglosphere's 'illiberal ruling elite.' They've been savaged mercilessly and I'm even surprised at the extent of the backlash. Never saw this coming.

by K.W. | 13th Jan 25, 10:01pm 1736758871

Just finished watching the Joe Rogan interview with Mark Zuckerberg. Zuck probably epitomises the slow awakening of the general populace, although as Rogan shows him, he still has a little way to go to fully realise the extent of what went on.

by Threecents | 13th Jan 25, 11:12pm 1736763126

Zuck wouldn't have changed his position on fact checking if Kamala had won. Zuck went along with whatever Biden's administration asked for.

by K.W. | 13th Jan 25, 6:09pm 1736744975

Why would you rebuild there if you believe that climate change is causing all the fires? Surely you would take your insurance money and do a "managed retreat" to somewhere like Utah where climate change cannot get you? Wild fire areas should be red zoned. Time for California to put their money where their climate policy is.

by Baywatch | 13th Jan 25, 6:20pm 1736745652

Looking forward to the new president making a visit to State (who doubts the climate science)...baptism by Fire?

by Frank. | 13th Jan 25, 6:19pm 1736745554

Exactly. Almost as stupid as rebuilding Christchurch on quicksand.

by Pa1nter | 13th Jan 25, 7:52pm 1736751165

Not all of Los Angeles or Christchurch got destroyed. Much of it survived intact. Insurance might cover some of a rebuild, but moving entire cities is pretty expensive.

by Frank. | 13th Jan 25, 8:00pm 1736751600

That may be so, however word on the street is that Mr Trump is moving the entire state of California to Greenland.

by Pa1nter | 13th Jan 25, 8:04pm 1736751891

Mr Trump says a lot of wild stuff.

Regardless, there's a reason when only part of a city gets impacted by a natural event, they don't move the whole city.

by K.W. | 13th Jan 25, 9:50pm 1736758251

Dont need to move the whole city, just the parts in the middle of forests and bushland that keep getting burnt down. However, if over time there is nobody left living there, so be it.

Christchurch red zoned over 5000 houses after the earthquake. To date, they've not been stupid enough to rebuild houses on the area. We have a cycling path there instead. One for the Greenies.

by Pa1nter | 13th Jan 25, 10:36pm 1736760981

Dont need to move the whole city, just the parts in the middle of forests and bushland that keep getting burnt down

Many of these burned houses are in vanilla suburbia. It's also a small percentage of the houses in the area.

People will rebuild there, because there's still significant demand for people to live there. Somewhere like Utah, doesn't offer the same things as Southern California.

by Threecents | 13th Jan 25, 11:47pm 1736765268

The available water supply has been a huge issue.

“This was supposed to be the water to put out the Palisades fire.” The FP’s Austyn Jeffs visits the Santa Ynez Reservoir that has reportedly been empty since February 2024.

https://x.com/TheFP/status/1878088302936379881

by Time Lord | 14th Jan 25, 6:22am 1736788966

GAVIN NEWSOM: All of our reservoirs here in southern California are full.

REPORTER: One of them was actually not full - the one that serves the Palisdes [which is on fire].

NEWSOM: That's why I asked for an investigation.

https://x.com/EricLDaugh/status/1878471506230903116

by Speedmax | 13th Jan 25, 6:34pm 1736746493

There is nowhere on the planet that won’t be affected by climate change. Obviously some places will be more affected than others, but the idea that we can somehow avoid it is ostrich thinking. We need massive investment in both GHG emission reduction (green transition) and mitigation

by powerdownkiwi | 13th Jan 25, 7:50pm 1736751021

The first two sentences are correct. So too is the last half of the last one.

But it's not 'investment' we need; that was the mistake Jimmy Carter made (and which Catton reprimanded, back in 1980 - why are we still back there?).

It is disinvestment; doing less or nothing. Green growth is just as temporary as blue or red or yelloy growth.

by Pa1nter | 13th Jan 25, 7:56pm 1736751392

It is disinvestment; doing less or nothing. Green growth is just as temporary as blue or red or yelloy growth.

The world's getting munted, because too many people are consuming too much stuff.

Doing and making more new stuff with an enviro-spin, isn't reducing the problem.

If we were super serious, we'd only manufacture items to last multiple generations, and we'd only buy a handful in a lifetime.

TLDR: we can't live like this at all.

by Uninterested | 13th Jan 25, 7:49pm 1736750992

Thing is: the insurance money does not buy your land off you....

by Palmtree08 | 13th Jan 25, 8:20pm 1736752821

"Gavin Newsom who has announced a sweeping plan to rebuild Los Angeles, dubbing it "L.A. 2.0"."

Hmmm. Sounds carbon intensive. Laying the groundwork for L.A. 3.0. The permanant scorched lifeless moonscape.

by Squishy | 13th Jan 25, 4:48pm 1736740102

Doesn't suprise me the Australian economy is picking up again. AUD has weakened making mineral exports more competitive. For example BHP and RIO break even at $45/t currently so prices now, $90/t, still works for them to expand into even if it's not record breaking prices they can make money by moving more volume.

by J.C. | 13th Jan 25, 4:57pm 1736740646

Sorry but this doesn't make much sense to me. Buyers don't "stock up" or buy more minerals because AUDUSD has weakened. In the case of iron ore, China-side they don't want the price to weaken as iron ore is has been used a loan collateral. In fact, the use of iron ore has seen instances of fraud, where warehouse receipts for iron ore were allegedly used multiple times to secure loans from different banks.

by Squishy | 13th Jan 25, 5:02pm 1736740942

True, but it does make Australia comparatively more competitive. Remember they are competing in part against marginal producers for market share.

by J.C. | 13th Jan 25, 5:17pm 1736741845

That depends on the resource. Aussie is already competitive on iron ore, natural gas, coal. They are price takers in the market. Not setters.

by Pa1nter | 13th Jan 25, 8:02pm 1736751761

by K.W. | 13th Jan 25, 5:38pm 1736743119

They may not stock up but they may change suppliers. Australia's biggest competitor is Brazil, where the Real has dropped 21% against the USD compared to the 8% drop of the Australian dollar, giving Brazilian producers a cost advantage over Australian producers. Such cost advantages then get passed through to buyers as cheaper prices.

by J.C. | 13th Jan 25, 5:56pm 1736744180

Aussie iron ore exports to China are approx 80%+ of its total iron ore exports and 61% of China's iron ore imports. The mkt is largely price driven, which is why China imports iron ore from Brazil if the price is right. Just because AUDUSD falls doesn't necessarily mean greater receipts for Forty, Rio Tinto.

FYI, Iron Ore 62% Fe, CFR China (TSI) Futures are down 29% over past 12 months.

by blobbles | 13th Jan 25, 6:13pm 1736745222

Everyone freaking out about US inflation up to 2.7%? I mean a single release isn't a trend. Seems more likely to me inflation will just bat around 2-4% for a while, meh.

by Squishy | 13th Jan 25, 6:39pm 1736746796

The FED are supposed to be targeting an average of 2%, they haven't actually achieved a rate at or under 2% since Feb '21.

Who knows, maybe Trump will do them a favour and move the target so they don't have to do the job they are so reluctant to do.

by Pa1nter | 13th Jan 25, 8:03pm 1736751812

And it's only an average. With no clarity about over what period the average is taken.

by kraken | 13th Jan 25, 9:21pm 1736756496

They better keep to their target. Personally, I believe the inflation target should be zero - after all, inflation is just another form of tax.

Reminds me of Stealing Harvard, "The string is a guide John, it's just a guide"

https://youtu.be/T11geyh65vY?si=96cGv8w7DjVYknrq

by kraken | 13th Jan 25, 8:28pm 1736753322

"The Australian 10 year bond yield is up +17 bps from this morning to 4.70%."

Excellent news. Means the Australian economy is strong and can handle higher rates, right?

Is Australia the United States or is it Argentina?

by Pa1nter | 13th Jan 25, 8:27pm 1736753276

Argentina, with better politics.

by kraken | 13th Jan 25, 8:36pm 1736753785

I'm thinking it could be that some parts of the economy are strong, but there are also inflation concerns. So, maybe it's a bit of both? I admire Argentina's leader, Milei, since I lean towards being a small-government libertarian myself.

by Pa1nter | 13th Jan 25, 8:56pm 1736754989

Their economic diversity is down in not good company, even lower than Argentina's.

by kraken | 13th Jan 25, 9:11pm 1736755892

Digging holes and building houses.

New Zealand might be the least economically diverse? We don't even dig holes.

by Pa1nter | 13th Jan 25, 9:34pm 1736757246

We're actually considerably more diverse. Just what we do do, doesn't make as much money as digging holes.

by kraken | 13th Jan 25, 9:37pm 1736757445

"I think I have too many hobbies and not enough money" - New Zealand

by kraken | 13th Jan 25, 10:29pm 1736760583

UK10Y just hit 4.9% and US10Y hit 4.8%. 'Hide Yo Kids, Hide Yo Wife’ - Antoine Dodson